[quote=temeculaguy]Here is what you are missing, 400k INTEREST ONLY LOAN!!!!
Look, I am considered a contrarian on these boards lately because I have an optimistic view of the future and have put today in perspective of where it falls in the last 20 years. I am not a “real estate is always bad, we are going to hell in a handbasket” guy. And I think you are talking yourself into bad math.
Interest only is nothing more than rent with risk. Use my formula, or at least use the fully amortized piti and ignore the tax deduction, it gets roughly cancelled out by maintenance and upkeep.[/quote]
But I think that’s what the OP is trying to say. Based on his calculation, it’s cheaper for him to rent from a bank than from a landlord (~400/month). I think 400/month is more than enough to cover any maintenance and upkeep. The only thing is, he’s not calculating into the risk of depreciation. What if price drop another 10-20%?
To be conservative, I agree with you that he should use PITI vs rent. $500k house that only rent for $2k/month is not that great. You can do much better, even in centrally located areas in San Diego. I wouldn’t go over 380-400k if it can only rent for $2k/month.
